Crypto Exchanges Ditch Fiat Gateways
Crypto exchanges stop fiat deposits due to bank/payment provider issues. Some also halt USD & fiat transactions as payment gateways are disabled. Let’s take a closer look at this trend.
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Binance halts support for several fiat currencies
Due to existing issues with certain payment partners and banks, cryptocurrency exchange Binance has decided to suspend deposits and withdrawals in British pounds.
From now on, transactions involving the British pound using bank transfer and the Faster Payments system will be suspended because Binance has terminated its cooperation with payment provider Skrill. It's not clear why the partnership was terminated. Deposits from registered users will continue until May 22, 2023, but new users haven't been able to deposit since March 13.
After May 22, the exchange will have to return transfers made in British pounds to the sender's addresses. The final date for withdrawing funds in that currency hasn't been announced yet.
Presumably, the restrictions on fiat operations are being introduced due to the bankruptcy of several US banks, including Silvergate Bank, Signature Bank, and Silicon Valley Bank (SVB), as well as the complex regulatory framework for digital assets in the UK.
In early March, Binance introduced currency restrictions for Russians on its p2p platform as part of the tenth package of sanctions. As a result of these measures, Russians can no longer buy or sell US dollars and euros through Binance. In addition, the exchange also banned EU citizens from buying and selling Russian rubles on its p2p platform.
At the same time, Binance has (temporarily?) suspended accepting deposits in Ukrainian hryvnia via Visa/Mastercard cards and the SettlePay wallet. However, transactions with the Ukrainian hryvnia can be carried out through the P2P platform and AdvCash wallet.
Furthermore, the exchange does not allow deposits in US dollars, although similar operations with euros and Australian dollars are not prohibited.
Huobi suspends US dollars transactions
Huobi exchange has temporarily suspended operations with US dollars, including deposits and withdrawals. The exchange has cited “partial updates to the deposit and withdrawal service in US dollars” as the reason for the move. Interestingly, this coincides with the bankruptcy of several American banks, so it remains unknown how long the suspension will last. The exchange has not provided a date for when the US dollar service will resume.
Notification of suspension of US dollar services
OKCoin also halts its transactions involving the US dollar
Cryptocurrency exchange OKCoin has also suspended the ability to deposit US dollars on its platform due to the collapse of the American financial institution Signature Bank. Hong Fang, the CEO of OKCoin and the president of the OKX exchange, announced the news on Twitter. She stated that the restriction does not apply to the withdrawal service and that all client assets are safe.
On March 12, the US Department of the Treasury, Federal Reserve System, and Federal Deposit Insurance Corporation (FDIC) issued a joint statement regarding the closure of Signature Bank. According to the document, the decision was made due to systemic risks, with the bank's senior leadership being removed from their positions.
As of 31 December 2022, Signature Bank had total assets of approximately $110.36 billion and deposits in the amount of $88.59 billion. All bank depositors will have full access to their funds, according to the announcement.
According to Hong Fang, Signature Bank was a major partner for the exchange in conducting operations with US dollars. Therefore, the bank's closure has some short-term consequences for the exchange.
ByBit: one of the first crypto exchanges to halt US dollar transactions
Cryptocurrency exchange Bybit was one of the first to announce the temporary suspension of deposits and withdrawals in US dollars to bank accounts. The restrictions came into effect on March 10th.
Bybit has released an official statement regarding the temporary suspension of processing bank transfers in dollars, including SWIFT payments, due to service disruptions caused by one of the exchange's partners. However, the crypto exchange refused to disclose the payment provider responsible for the suspension.
Final words
The banking system issues, including the bankruptcy of three American banks, are posing significant challenges for the cryptocurrency market. In particular, there are high risks for stablecoin issuers who hold their collateral in banks, as well as for cryptocurrency exchanges that offer fiat currency operations.
US regulators and those from other countries continue to push the idea of risks for the banking sector through the cryptocurrency market, but in practice, it seems to be the opposite.
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